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THE MANILA HOTEL CORP. AND MANILA HOTEL INTL. LTD. vs.

NLRC1
PARDO, J. G.R. No. 120077. October 13, 2000

Facts:
 Private respondent Marcelo Santos was an overseas worker employed as a printer at the Mazoon Printing Press,
Sultanate of Oman.
 During his employment with the Mazoon Printing Press in the Sultanate of Oman, respondent Santos received a letter
dated May 2, 1988 from Mr. Gerhard R. Shmidt, General Manager, Palace Hotel, Beijing, China. Mr. Schmidt informed
respondent Santos that he was recommended by one Nestor Buenio, a friend of his.
 Mr. Shmidt offered respondent Santos the same position as printer, but with a higher monthly salary and increased
benefits. The position was slated to open on October 1, 1988.
 On May 19, 1988, the Palace Hotel Manager, Mr. Hans J. Henk mailed a ready to sign employment contract to
respondent Santos. Santos then wrote the Palace Hotel and acknowledged Mr. Henk's letter. Respondent Santos
enclosed four (4) signed copies of the employment contract (dated June 4, 1988). He notified them that he was going
to arrive in Manila during the first week of July 1988 and would go to China on November 1988
 After landing in China, he signed an amended "employment agreement" with the Palace Hotel, effective November 5,
1988. In the contract, Mr. Shmidt represented the Palace Hotel. The Vice President (Operations and Development) of
petitioner MHICL Miguel D. Cergueda signed the employment agreement under the word "noted".
 The employment contract of June 4, 1988 stated that his employment would commence September 1, 1988 for a
period of two years. It provided for a monthly salary of nine hundred dollars (US$900.00) net of taxes, payable
fourteen (14) times a year.
 On August 10, 1989, the Palace Hotel informed respondent Santos by letter signed by Mr. Shmidt that his employment
at the Palace Hotel print shop would be terminated due to business reverses brought about by the political upheaval
in China (Tiannamen Square incidents).
 On February 20, 1990, respondent Santos filed a complaint for illegal dismissal and named MHC, MHICL, the Palace
Hotel and Mr. Shmidt as respondents. (He probably sued MHC because it was the one who trained him). The Palace
Hotel and Mr. Shmidt were not served with summons and neither participated in the proceedings before the Labor
Arbiter
 LA ruled in favor of Santos. NLRC affirmed the LA decision. Hence the appeal of the petitioners. Petitioners question
the jurisdiction of NLRC to hear this case.

Issues:
1.) W/N NLRC had jurisdiction over the case. NO.
2.) W/N MHC and MHICL are liable. NO.

Ratio:

1. Under the principle of Forum Non-Conveniens, the NLRC was a seriously inconvenient forum.

The main aspects of the case transpired in two foreign jurisdictions and the case involves purely foreign elements. The only
link that the Philippines has with the case is that respondent Santos is a Filipino citizen. The Palace Hotel and MHICL are
foreign corporations. Not all cases involving our citizens can be tried here.

The employment contract. — Respondent Santos was hired directly by the Palace Hotel, a foreign employer, through
correspondence sent to the Sultanate of Oman, where respondent Santos was then employed. He was hired without the
intervention of the POEA or any authorized recruitment agency of the government.

Under the rule of forum non conveniens, a Philippine court or agency may assume jurisdiction over the case if it chooses to do
so provided:
(1) that the Philippine court is one to which the parties may conveniently resort to;
(2) that the Philippine court is in a position to make an intelligent decision as to the law and the facts; and
(3) that the Philippine court has or is likely to have power to enforce its decision.

1
Petitioners are the Manila Hotel Corporation (MHC) and the Manila Hotel International Co., Limited (MHICL).
When the case was filed in 1990, MHC was still a government-owned and controlled corporation duly organized
and existing under the laws of the Philippines.
MHICL is a corporation duly organized and existing under the laws of Hong Kong. MHC is an "incorporator" of
MHICL, owning 50% of its capital stock.
By virtue of a "management agreement" with the Palace Hotel (Wang Fu Company Limited), MHICL trained the
personnel and staff of the Palace Hotel at Beijing, China.
The conditions are unavailing in the case at bar:

Not Convenient. — We fail to see how the NLRC is a convenient forum given that all the incidents of the case — from the time of
recruitment, to employment to dismissal occurred outside the Philippines. The inconvenience is compounded by the fact that
the proper defendants, the Palace Hotel and MHICL are not nationals of the Philippines. Neither are they "doing business in the
Philippines." Likewise, the main witnesses, Mr. Shmidt and Mr. Henk are non-residents of the Philippines.

No power to determine applicable law. — Neither can an intelligent decision be made as to the law governing the employment
contract as such was perfected in foreign soil. This calls to fore the application of the principle of lex loci contractus (the law of
the place where the contract was made).

The employment contract was not perfected in the Philippines. Respondent Santos signified his acceptance by writing a letter
while he was in the Republic of Oman. This letter was sent to the Palace Hotel in the People's Republic of China.

No power to determine the facts. — Neither can the NLRC determine the facts surrounding the alleged illegal dismissal as all
acts complained of took place in Beijing, People's Republic of China. The NLRC was not in a position to determine whether the
Tiannamen Square incident truly adversely affected operations of the Palace Hotel as to justify respondent Santos'
retrenchment.

Principle of effectiveness, no power to execute decision. — Even assuming that a proper decision could be reached by the NLRC,
such would not have any binding effect against the employer, the Palace Hotel. The Palace Hotel is a corporation incorporated
under the laws of China and was not even served with summons. Jurisdiction over its person was not acquired.

2.)
MHC’s liability

Although MHC is an incorporator of MHICL and owns fifty percent (50%) of its capital stock. However, this is not enough to
pierce the veil of corporate fiction between MHICL and MHC. Our jurisprudence tells us that mere ownership by a single
stockholder or by another corporation of all or nearly all of the capital stock of a corporation is not of itself a sufficient reason
for disregarding the fiction of separate corporate personalities.

MHICL’s liability

Respondent Santos predicates MHICL's liability on the fact that MHICL "signed" his employment contract with the Palace
Hotel. This fact fails to persuade us. The Vice President (Operations and Development) of MHICL, Miguel D. Cergueda signed
the employment contract as a mere witness. He merely signed under the word "noted".

Mr. Cergueda merely signed the "witnessing part" of the document. As opposed to a party to a contract, a witness is simply one
who, "being present, personally sees or perceives a thing; a beholder, a spectator, or eyewitness." One who "notes" something
just makes a "brief written statement" a memorandum or observation.

There was no employer-employee relationship between MHICL and Santos. It did not select respondent Santos as an employee
for the Palace Hotel. He was referred to the Palace Hotel by his friend, Nestor Buenio. MHICL did not engage respondent Santos
to work. The terms of employment were negotiated and finalized through correspondence between respondent Santos, Mr.
Schmidt and Mr. Henk, who were officers and representatives of the Palace Hotel and not MHICL. Neither did respondent
Santos adduce any proof that MHICL had the power to control his conduct. Finally, it was the Palace Hotel, through Mr.
Schmidt and not MHICL that terminated respondent Santos' services.